Mountain Real Estate Capital, the equity investment arm of the Mountain Real Estate Group, closed a $75 million joint venture with GL Homes of Florida to purchase one new project and recapitalize six other partnerships.
The MREC/GL ventures include over 8,300 acres of land and 6,500 home sites located in West Palm Beach, Tampa, Naples and Fort Myers.
This transaction allows Mountain to acquire partnership interests from a major financial institution in areas that GL Homes and Mountain view as growth areas, and provides a platform from which the joint venture can make additional acquisitions, said Peter Fioretti, chief executive officer of MREC.
The joint venture will develop lots and complete home sites over an eight- to 10-year period with the estimated sell-out value in excess of $1.8 billion.
"The complex transaction involved the simultaneous restructuring and closing of multiple partnerships. Mountain was able to underwrite and close in less than 30 days," said Fioretti.
Joel Kaul and Eric Bialke of Mountain worked with the GL Homes' management team to establish the new joint venture.
"We view this as a great opportunity to assist GL in the expansion of their homebuilding operations and in the implementation of their long-term business plans," said Kaul.
There are more than 60,000 people living in homes built by GL throughout Florida.
"We had a short window to take advantage of an opportunity to bring in a new partner and we were thoroughly impressed by Mountain's ability to underwrite, coordinate and close so quickly," said Dick Norwalk, chief operating officer of GL Homes.
The new investment entity is focused on three types of investments including acquisition of bank REO and nonperforming loan portfolios, the acquisition of opportunistic assets for its own account or in partnership with developers, and joint ventures with national and regional homebuilders to develop and sell residential lots and houses.
The Mountain Real Estate Group, headquartered in Charlotte, N.C., has origination and management offices in most major regions of the country.
Many of its staff joined Mountain in 2009 from GMAC-ResCap's Business Capital Group.
Kaul, who manages the origination effort for Mountain Real Estate Capital Partners, also headed up the group who came over from GMAC-ResCap. The group continues to focus on joint venture and equity investments with its national network of established developers/builders.
MERC also purchased a portfolio of 56 residential communities throughout the Greater Atlanta area from Bank of North Georgia.
The assets are composed of 500 acres and over 700 home sites.
The dual plan is to first sell some of the projects to builders, and second, to build houses in joint venture with local and regional builders with whom the company has an existing relationship.
"What differentiated this bank portfolio from others that we have underwritten in Georgia is that the assets consist substantially of finished lots with a manageable amount of raw land, and the locations are clustered in the better counties surrounding Atlanta," said Arthur Nevid, chief investment officer of MERC.
"We are confident that we will be able to quickly sell some of these quality projects on a retail basis to merchant builders, but realize even greater upside through the construction of houses in joint venture with qualified builder partners."
Tom Mahathirath, senior investment manager, originated this transaction with Bank of North Georgia through an existing relationship.
He said the company is already moving forward on the acquisition of two more portfolios from this same bank, which will help it improve its balance sheet.
"We are looking for win-win situations with financial institutions that need to sell portfolios quickly and need a buyer that is dependable, moves fast and provides a high level of certainty with closing, Mahathirath said.
Mountain's effort to manage, sell or build out these communities will be spearheaded by its affiliate, Mountain Asset Management.
The company said it intends to close on multiple bank nonperforming loan/REO portfolios this year, as many banks now have the reserves set aside to close on these types of transactions. Mountain is focusing on banks that need an additional equity infusion into Tier 1 capital in order to effectuate a larger portfolio sale.